Macau, the world’s gambling capital, is becoming more intertwined with a Chinese neighbor — one person, train and building at a time.
A former Portuguese colony, Macau was reclaimed 25 years ago by China and declared a special administrative zone, part of the mainland but with some independence. Beijing agreed to mostly keep its hands off the 12-square-mile territory.
Like nearby Hong Kong, Macau would be part of China but free to govern itself and run its economy without interference from Beijing. It quickly rose to become the world’s most lucrative gambling destination, drawing big American casinos like Wynn and Sands and catering to mostly Chinese tourists.
Now China’s political experiment in Macau is undergoing another transition. China’s leader, Xi Jinping, who visited Macau this week to mark the anniversary of the territory’s “return to the motherland,” wants Macau to operate less independently of mainland China. In Mr. Xi’s vision, Macau will wean itself off an economic reliance on gambling and play a role in boosting China’s own lagging consumer economy.
At the heart of this new push is Hengqin, a Chinese island separated from Macau by a river.
In a sprawling new immigration complex at Hengqin Port, officers for China and Macau sit side by side, waving people over a new border. More than 16,000 Macau citizens have moved to Hengqin in recent months. A train made its maiden journey from the city into Macau this month. There is even talk of creating a Macau Stock Exchange in its financial district.
Hengqin was one of Mr. Xi’s first stops after landing in Macau this week. He met with Macau citizens living and working in a new economic zone that is being administered jointly by Chinese and Macau authorities, part of a “birthday gift” to Macau during the 20th anniversary of the former colony’s handover.
“I hope Macau will embrace a broader vision,” Mr. Xi said at a welcome dinner on Thursday night, adding that Macau should “proactively align itself with national development strategies.”
On Friday, Mr. Xi will attend the inauguration of Sam Hou Fai, Macau’s next chief executive and its first leader born in mainland China. Mr. Sam, who had been Macau’s top judge since the territory was returned to China from Portugal in 1999, was chosen for his new post by an election committee of mostly Beijing loyalists.
Beijing has given Macau more land to expand in Hengqin, eased restrictions on Chinese tourists traveling to Macau to gamble at its casinos and offered the casinos favorable investment policies to build resorts and conference centers in Hengqin.
Mr. Xi’s treatment of Macau, with a population of 700,000 people, stands in contrast to his approach in Hong Kong, where in 2019 millions of people protested moves to make the territory more like the rest of China. Beijing responded by imposing a tough national security law and jailing pro-democracy leaders.
“Macau has followed the directive from the central government, the people have accepted it and there hasn’t been much protest or noise from the community,” said Larry So Man-yum, a retired professor of social work at Macau Polytechnic Institute. The preferential policies in Hengqin for Macau citizens “are like candies for well-behaved children,” he said.
In many ways, Macau needs China. It has little space to build new industries and housing and its government derives most of its revenues from one industry — casinos. Its freshwater supply comes from a river that flows into the Pearl River in China.
A crackdown by the Chinese government in recent years on money laundering, as well as Beijing’s strict pandemic policies, has reduced the number of Chinese visiting to gamble. Mr. Sam, the incoming leader of Macau, has warned that relying too much on casinos could result in economic perils for the territory.
At the same time, Beijing needs Macau. It is the only place in China where gambling is legal. Macau offers Chinese tourists a destination where they can let off steam and explore European-style cobbled streets, culture and other remnants from the territory’s four centuries under Portuguese rule.
Closer ties with Hengqin is likely to make Macau further subject to Chinese regulations, said Carlos Alvares, chief executive of Banco Nacional Ultramarino, one of two banks in Macau that print the local currency, the pataca.
“But Macau is going to maintain this historical side and its historical perspective, because what the authorities say is that they like very much that Macau stays a different city from the others,” he added.
Mr. Xi is hoping that Hengqin can piggyback on Macau’s reputation to be a place that attracts both foreign investments and tourists willing to spend money and boost its flagging economy. He told Macau’s leaders on Thursday to “seek to play a bigger role on the international stage.”
Macau businesses have been asked to cough up money to build attractions like entertainment centers and resorts in Hengqin, as part of a broader Chinese project known as the Greater Bay Area that is merging and blurring the boundaries between major southern Chinese cities as well as Hong Kong.
Casinos including Galaxy Macau, MGM Macau and Wynn Macau have pledged resources to build new resorts. Days before Mr. Xi’s visit, a subsidiary of the gambling empire SJM Holdings said it would acquire nine floors of office space in Hengqin to turn it into a three-star hotel.
The deal was SJM’s contribution to Macau’s “integration into the national development agenda,” said Daisy Ho, chairman of SJM and the daughter of the Macau gambling magnate Stanley Ho.
Laurence Dang, 35, recently bought a home in Hengqin’s Macau New Neighborhood, an area that the Chinese government designated for Macau citizens to encourage them to move.
“People call it the backyard of Macau,” he said.
When Mr. Dang and his wife decided to buy an apartment in the compound in April, the line of buyers was so long they had to wait four hours just to pick the unit they wanted.
“I’ve never seen so many people in Hengqin,” Mr. Dang said. Like many other buyers, Mr. Dang and his wife were looking for more space than they could find in Macau. At around $4,100 per square meter, the apartments were much cheaper than in Macau, where the average apartment costs $13,800 per square.
There were other goodies like a $275 voucher for food. The authorities have agreed to subsidize management fees for the complex as well as internet, electricity and water bills, according to Chinese state controlled media.
In Macau New Neighborhood in Hengqin, the invisible boundaries between Macau and the rest of China are being renegotiated. Residents can watch television channels from overseas and use the internet beyond China’s Great Firewall. They can use Macau’s currency and its public bus or light rail services to cross the river back into Macau.
For many younger Macau citizens like Teng Teng, 31, there are benefits from a deeper connection with the rest of China. Mr. Teng, who sells egg waffles from a small stall near a famous Macau landmark, the Ruins of St. Paul’s, likes to take trips to neighboring Zhuhai to eat cheap food and relax.
While the changes in Hengqin mean small businesses in Macau have growing competition for tourism, gambling revenue at Macau’s casinos in October jumped to their highest levels since the pandemic. In October, the number of visitors to the territory during China’s Golden Week holiday hit a record.
For Chung Kwong-ming, 65, who sells refrigerator magnets featuring the Ruins of Saint Paul’s and Senado Square in a little booth near the attractions, the return of Chinese tourists is a positive sign.
“I welcome more mainland tourists to Macau,” Mr. Chung said. “That can help my business.”
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